* Speech of Deputy Attorney General
LARRY D. THOMPSON
A Day With Justice
Washington, DC
October 28, 2002

Good evening. It is good to be with you.

Although on a day-to-day basis I devote much of my time to the war against terrorism that we are
waging both here and abroad, I know that other speakers plan to address those
pressing concerns. Instead, I will say a few words about a subject near to
my heart as both a prosecutor and a former white-collar defense lawyer of many years:
and that is our efforts to combat the culture of greed and deceit that tolerates
and propagates fraud within some of our corporations - and I would
like to emphasize SOME. This aberrant corporate behavior exists in, I believe,
a tiny minority of American businesses. Nevertheless, the problem is serious
- and is certainly worth bringing to the attention of this distinguished
group of business leaders.

I cannot, of course, discuss specific cases, but this issue cuts across individual
companies and, indeed, across the boundaries between mere misconduct and criminal
offenses. Pervasively corrupt companies - companies that not only employ
some corrupt individuals, but have become corrupt in their culture - are
a true threat to our nation's well being.

Now, as we all are so painfully aware, our financial markets have been shaken
by a wave of criminal conduct at the highest levels in some American corporations.
While this conduct is shocking, it is not without precedent and the administration
is taking swift and certain action to punish the wrongdoers and restore confidence
to investors.

Several months ago, the president established the Corporate Fraud Task Force,
an interagency group that represents the vast law enforcement resources of the
Justice Department, the SEC, the Treasury Department and others. We are coordinating
and overseeing these efforts to root out fraud in corporate boardrooms and executive
suites, and to put the wrongdoers in prison.

Those crimes have compromised the integrity of a wide range of companies --
from multi-billion dollar communications giants to tiny Internet start-ups.
And because the vitality of our increasingly complex economy rests on the free
and fair exchange of information, these crimes are particularly pernicious and
appropriately the subject of intense - and that is what they are getting
- law enforcement focus and action. They affect not only institutions,
but shareholders and employees and pensioners. They harm average folks as well
as major investors, Main Street as well as Wall Street.

As noted, in discussing these crimes, it is important not to tar with too
broad a brush the overwhelming majority of corporations that operate morally
and productively in the best and highest interest of their shareholders and
the country. Yet, I believe you will agree the breadth and extent of these recent
scandals do demonstrate intolerable legal and ethical misdeeds that require
a comprehensive response.

While we have focused the brunt of our actions on individual corporate criminals,
there is a significant category of wrongdoers who cannot be imprisoned, but
are nonetheless crucial targets of our efforts. Although it should be done sparingly,
we will not hesitate to prosecute corporations themselves when the circumstances
warrant it.

In making the decision to seek an indictment against a corporation, we consider
a number of factors:

The company's history of wrongdoing,

its response to regulatory actions,

its reaction to the criminal conduct committed by its employees, including
the cooperation with the Government's investigation;

the level within the corporation at which the crimes were committed or condoned,
and

the pervasiveness of the criminal behavior within
the organization.

Assessing these factors opens a window into the firm's culture. I am often
asked, "Why are these corporate scandals happening?" I don't know
- but my experience tells me we do need to look at corporate cultures.
As those of you who work in large corporations know, companies develop their
own methods that guide employees' thoughts and actions. That culture is a web
of attitudes and practices that tends to replicate and perpetuate itself beyond
the tenure of any individual manager. That culture may instill respect for the
law or breed contempt and malfeasance. The organization itself must be held
accountable for the culture and the conduct it promotes.

Civil sanctions simply do not have the power of criminal penalties to concentrate
the corporate mind and change corporate culture. Large business organizations,
particularly public companies that are already regulated in myriad ways, sometimes
have the disappointing tendency to view civil sanctions as merely the "cost
of doing business" - a cost that can be passed on to customers and
shareholders without lingering effect in the management suite and the board
room.

Indeed, without corporate criminal liability, there would be no effective
deterrent to a corporate culture that - expressly or tacitly - condones
criminal conduct. Instead, corporations could merely appoint a "vice-president
in charge of going to jail" who would serve as a whipping boy for the collective
acts of the organization.

Let's talk about the role we lawyers may play in these times of corporate
scandals. Lawyers, both outside and in-house counsel, can play a major role
in this corporate culture - both for good and for ill. The attorney's role
is to take an independent look with some healthy skepticism at the corporation's
conduct - where it is right to keep it right, and where it is not, to make
it right. The pressure can be intense to go along, as some accountants have
sometimes gone along, with a company's improper practices on the theory that
they are only "cutting corners." But, lawyers have a responsibility
to their clients, to the profession and to the public to view such practices
in the cold light of reality with an eye toward how they may look splayed out
on the front page in the unforgiving glare of unfavorable public attention.

In my private practice, I had many opportunities to see up close how corporations
and their counsel dealt with serious legal issues - some of which posed
a grave threat to the health and well-being of the company. What I have seen
is lawyers in such situations tend to get into trouble, I believe, when they
make one or both of the following mistakes:

First, the attorneys forget who their client is. We all know from the first
year of our law school corporate law class that the client is the corporate
entity. Not the CEO or General Counsel who hired you, and not even the Board
of Directors. Yet a recent survey conducted by the American Corporate Counsel
Association that is very disturbing found that more than 20% of general counsels
felt that their corporate culture emphasized "senior management" as
the client. That is a minority view, but a large enough minority to get plenty
of companies into trouble.

Second, some attorneys fail to give corporate clients their independent professional
judgment. That phrase "independent professional judgment" is, and
ought to be, redundant. A professional lawyer, by definition, is a person retained
to render independent judgment under the law. Indeed, among the ethical considerations
that we, as attorneys, are urged to respect is the admonition that our professional
judgment "be exercised solely for the benefit of the client and free of
compromising influences and loyalties."

Giving independent judgment is more important than job security. Independent
judgment is the only thing lawyers, as professionals, have to offer. Think about
this: Without it, we are mere hired guns who trade off of the very integrity
of our profession. What we see is that in many major corporate fraud cases,
there are professionals - accountants, investment bankers, and, not least,
attorneys - who were either complicit or negligent. We need to find out
who they are and take whatever measures we can to answer the question that always
comes up: Where were the professionals?

In the recently enacted corporate reform law, Congress ordered the S.E.C.
to devise rules requiring attorneys to report evidence of misconduct to the
general counsel and, if he or she does not fix the problem, to an independent
committee of the board. These rules will make formal a process that should have
already been occurring in well-run companies. These rules will give the Department
yet another mechanism to closely watch the conduct of professionals advising
the corporation. And where appropriate, we will not hesitate to hold them, as
well as their clients, accountable for fraud.

We will press ahead in these efforts and look forward to your continued cooperation
and support. Our goal is to separate the offenders from law-abiding companies.
In many cases, that separation will be physical and for an extended term of
years. My hope is that comprehensive enforcement efforts will restore investor
confidence in the integrity of the market by demonstrating that financial criminals
will pay - and they will pay with more than financial penalties.

I believe we are on the right track but we will not be complacent. As Will
Rogers once said, "even if you're on the right track, you'll get run over
if you just sit there." And we will not just sit there.

Thank you.

*NOTE: Mr. Thompson frequently speaks from notes and may depart from the speech
as prepared. However, he stands behind the speech as presented in written format.